The Importance of Cryptocurrency for the Cannabis Industry

DisclaimerBitCanna (BCNA) is no longer accepted as a payment method at Royal Queen Seeds. We regret any inconvenience and invite you to explore our other payment options.

Cryptocurrencies have forever changed the way we handle money. At RQS, we’re huge fans of crypto, and plan to do our part in helping cryptocurrencies like Bitcoin become globally accepted payment methods.

Below, we’ll outline why we love cryptocurrencies, why they are relevant to the cannabis space, the challenges they face, and describe the two crypto coins we’re currently accepting at our shop (Bitcoin and BitCanna).

What Are Cryptocurrencies?

The terms cryptocurrency, blockchain, and Bitcoin often get used interchangeably, but it's actually very important to understand the differences between them. Without getting too technical, we’d like to make the following distinction between these terms:

• Blockchain is a decentralised, encrypted technology that enables the existence of cryptocurrencies and tokens. Although, advances in blockchain technology show its uses may exceed far beyond simply handling monetary transactions.
• Cryptocurrency is a trade medium (like US dollars or euros) that uses blockchain technology to establish monetary units and verify transactions.
• Being the first ever created, Bitcoin is the best-known example of a cryptocurrency.

We are actively integrating cryptocurrencies into the payment options we offer. To help our customers understand these currencies, how they work, and why they’re so relevant, we like to describe their functionality as follows.

Blockchain is the foundational technology on which cryptocurrencies like Bitcoin exist. To avoid getting dizzied by all the technicalities, it helps to think of blockchain as an accounting ledger that records transactions on a system of computers. This ledger is open access, meaning it can be run on any computer (or node) and is constantly updated and verified by the network of computers running it.

It is also append-only, meaning none of the computers running a blockchain ledger can edit the information it holds; they can only add new transactions. To secure the data on the ledger, blockchain technology leverages cryptography to protect all of the transactions it logs. What you’re left with is one big, encrypted, public, peer-to-peer accounting system that isn’t owned by a single entity.

Bitcoin and other cryptocurrencies are basically monetary systems that use blockchain technology to establish coins with a monetary value and log trades made with those coins.

• Benefits of Cryptocurrency

The value of currencies like Bitcoin comes from the number of people using them as well as the unique advantages they hold over traditional shops of value such as gold, oil, or fiat currency. Here are some of the main advantages:

✔️ Cryptocurrencies are decentralised, meaning their value or use isn’t governed by any one entity.

✔️ Cryptocurrencies are finite, meaning (at least in theory) that they are an excellent hedge against inflation.

✔️ Cryptocurrency transactions are made peer to peer. Because they are not subject to financial middlemen (such as banks, credit card companies, or brokers), crypto transactions aren’t subject to the fees these middlemen charge.

✔️ Crypto transactions are confidential. When you make a purchase with your credit card, a merchant gets access to your entire credit line, and governments or other third parties can track the purchase you’ve made. Because crypto transactions are recorded on an encrypted, append-only ledger, the transactions you make with crypto aren’t visible to anyone but the person you’re trading with.

✔️ Cryptocurrencies are accessible. Anyone with internet access can create a crypto wallet, buy cryptocurrency, and begin trading with it.

✔️ Cryptocurrencies aren’t subject to third-party approval, meaning transactions are much faster than traditional transaction methods (such as wire transfers, for example).

Why Are Cryptocurrencies So Important to the Cannabis Space?

In addition to all of the benefits listed above, we believe in crypto chiefly for its ability to help cannabis companies like ours overcome the many challenges we face operating in the current financial domain. Despite the industry's exponential growth and worth, cannabis businesses continue to autumn victim to prejudice from banks, credit card companies, and other financial providers who choose not to service us.

In the US, home to a multibillion-dollar legal cannabis industry, cannabis companies operating completely above board in legal states are still forced to operate “cash only^[1]”. US banks, which are subject to federal US law (which considers cannabis a Schedule 1 controlled substance), refuse to handle money from legal cannabis companies out of fear of being prosecuted for money laundering.

It obviously doesn’t take a lot of deep thinking to understand the security complications of forcing a billion-dollar industry to remain unbanked. Across the US, dispensaries and other legal cannabis companies have already fallen victim to waves of violent, audacious, and well-organised robberies.

Even in Europe, legitimate cannabis companies like ourselves continue to struggle against the prejudice of payment providers who refuse to acknowledge the legitimacy of our industry. Credit card companies, for example, often reject payments made to companies operating completely legally in the cannabis space. Many seed banks also can’t process payments from digital platforms like PayPal or Payoneer, for example, which have similar policies regarding cannabis.

For cannabis companies forced to operate under these restrictions, crypto obviously holds a ton of potential. Not only does it allow cannabis companies to securely manage non-cash payments, but it also allows them to reduce banking or service fees, and operate without being scrutinised by any regulatory third parties. Most importantly, cryptocurrencies allow cannabis companies like RQS to enjoy the same freedoms as any other legitimate, legal business.

Through the use of cryptocurrencies, the cannabis space could become a prime example of a legitimate industry that operates outside the confines of our traditional financial system and benefits from less prejudice, lower fees, and faster transaction speeds—all without sacrificing security or trust.

What Challenges Do Cryptocurrencies Still Face?

While cryptocurrencies hold a lot of promise, we need to be realistic and recognise that they also have some limitations.

Arguably one of the biggest challenges cryptocurrencies continue to face is their instability. Cryptocurrencies only gain value when their user base grows. And to this day, only a handful of coins have been able to attract and maintain a steady user base. Even Bitcoin, the most valuable crypto on the market, has seen massive fluctuations in its value. And without a reliable user base to drive up and maintain their value, cryptocurrencies don’t offer a viable solution to the cannabis industry's banking problem.

Cannabis-specific cryptocurrencies struggle with this even more. Their hyper-specific, single-industry focus only further limits their adoption and market capitalisation. In order for a coin to be adopted by publicly trading companies, they need to be widely used, and that isn’t the reality for many cannabis-specific cryptos.

In fact, few "altcoins" give companies a solid reason to use them over more established cryptocurrencies such as Bitcoin or ETH, which already have a strong user base and some value. For these companies, adopting the use of an altcoin could open them up to huge value fluctuations that could greatly compromise the profitability of their business.

Due to these limitations, few cannabis-specific cryptos offer a practical solution to the industry’s problems at present. But that doesn’t mean that there is no place for blockchain in cannabis; as you’ll see below, blockchain technology could promote progress in the cannabis industry in many other ways that don’t actually have to do with banking or managing payments.

Other Applications for Blockchain Technology in the Cannabis Space

While cryptocurrency is probably the best-known use case of blockchain, the technology’s potential actually reaches far beyond simplifying and decentralising payments. The digital, encrypted, and shared ledgers blockchains create can be used to securely store all kinds of data, not just transactions made with crypto tokens. And many of blockchain’s potential uses could have a huge impact on the cannabis industry in particular.

• Storing and Securing Clinical Data

One area relevant to cannabis where blockchain is showing a lot of potential, for example, is in the storage of sensitive data related to clinical trials. Medical research is reliant on keeping good records; in order to produce the most objective results, medical trials need to meticulously track patient data, the drugs or procedures being tested, and the entire trial process from beginning to end.

In order to produce objective clinical results, researchers need to be able to track and trace the smallest amendments or complications encountered during a trial in order to have a clear scope of the entire trial and its limitations. Blockchains allow researchers to securely store all of this relevant data and review it, while knowing the data remains protected by the highest level of cryptographic security to minimise the margin of error.

There are already some instances of blockchain being used to help secure the transfer of medical data. BurstIQ^[2], for example, is a Colorado-based project that uses "smart contracts" (digital contracts whose rules are enforced in real time on a blockchain) to securely transfer sensitive medical information between doctors and patients. This technology could easily be adapted to simplify, for example, consultations between doctors and patients being evaluated for cannabis-based therapies.

Another similar case is Patientory, a blockchain solution designed to tackle the problem of fragmented medical information spread across multiple providers/clinics. The platform, developed in Georgia, helps to unite all of a patient's medical records on a secure ledger and communicate that to relevant entities (such as healthcare providers or clinicians) when necessary. Similar platforms could be developed to help streamline healthcare data in the medical cannabis space.

• Supply Chain Improvements

Blockchain could also revolutionise supply chains in the cannabis industry. Arguably one of the biggest concerns for cannabis consumers buying flower or concentrates, for example, is being able to trust the quality of the products.

Similar to the way it securely stores transactional or medical data, blockchain could be used to log the entire production process of a batch of flower or concentrate from seed to harvest. Consumers or retailers could then use this data to learn exactly what seeds a batch of cannabis came from, where and how it was grown, what fertilisers/insecticides were used at what times and in what concentrations during its production, and more.

The end result would be a secure, transparent database for cannabis supply chains that would help to further legitimise the industry and ensure the quality and standard of its products.

What Cryptocurrencies Does Royal Queen Seeds Accept?

As part of our commitment to the cannabis space and our strong belief in blockchain/crypto technology, we currently accept payments in:

• What About Other Cryptocurrencies?

We’re working hard to be able to accept payments from other coins and tokens in the future. We’re well aware of alternatives to Bitcoin and BitCanna that offer tailor-made crypto and blockchain solutions for the cannabis industry, and we’re striving to incorporate them into our available payment options.

To the Future of Cannabis

At RQS, we’re about more than just producing great genetics. We share a real commitment and responsibility to our industry, and are always looking for ways to not only improve our internal processes and services, but also have a positive impact on the industry we love so much. Accepting and promoting cryptocurrencies and blockchain technology is just one of the ways we aim to help the cannabis industry become the best it can be.